US PS Oct contracts rise 3 cents/lb on tight supply, strong demand

31 October 2013 18:42[Source: ICIS news]

HOUSTON (ICIS)--US polystyrene (PS) contract prices rose on average by 3 cents/lb ($66/tonne, €48/tonne) for all grades in October, based on tight supply and strong seasonal demand as well as a push by producers to improve margins, sources said on Thursday.

The 3 cent/lb increase follows immediately on the heels of a September increase of 3 cents/lb for general purpose polystyrene (GPPS) and 1 cent/lb for high impact polystyrene (HIPS).

While feedstock costs dropped during the month, with spot benzene prices hitting a 16-month low and spot styrene prices hitting an 11-month low, various production outages have kept supply tight during what is traditionally one of the strongest demand months of the year.

Buyers said they were surprised by the increase, saying they had been expecting at worst a flat settlement, if not a slight reduction, based on the lower feedstock costs.

"There is no real justification for plus three, but the market is relatively tight," said one buyer.

The market in September and October was hit by supply disruptions, including a force majeure for PS production at the Americas Styrenics plant in Torrance, California, and planned maintenance at its Marietta, Ohio, plant, as well as a disruption at Styrolution's plant in Springfield, Massachusetts.

All of the plants have since been restarted, but supplies are still tight as producers work to rebuild inventories, sources said. Americas Styrenics still has some customers who are supplied by its Torrance, California, plant on allocation, a source said.

In addition to the supply tightness, some said the price increase was an effort by producers to add some more margin into the business.

After the increase US October PS contract prices as assessed by ICIS were at 103-105 for bulk GPPS DEL (delivered) and 111-113 cents/lb for bulk HIPS DEL.